WHEN MERRILL LYNCH & Co. paid $1.3 billion for subprime lender First Franklin Financial Corp. 10 months ago, Chief Executive Officer Stanley O’Neal promised “revenue velocity.” What he got is a dead weight with decelerating earnings.
Dwindling income from First Franklin and the $5 billion writedown Merrill incurred for the third quarter mean Wall Street’s biggest brokerage has no chance of fulfilling Chief Financial Officer Jeffrey Edwards’ April estimate of as much as $700 million in annual revenue from underwriting subprime mortgages and repackaging them into bonds.
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